BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 1575|
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THIRD READING
Bill No: AB 1575
Author: Pan (D), et al.
Amended: 5/20/14 in Senate
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 9-1, 6/24/14
AYES: Correa, Berryhill, Cannella, De Le�n, Galgiani,
Hernandez, Lieu, Padilla, Torres
NOES: Vidak
NO VOTE RECORDED: Vacancy
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 70-2, 4/21/14 - See last page for vote
SUBJECT : Personal services contracts: reports and
termination
SOURCE : AFSCME
DIGEST : This bill requires state contracts for personal
services to include specific performance criteria and cost
parameters; requires reports by the contractor; and provides for
cancellation by the contracting agency if the contractor fails
to comply with various requirements.
ANALYSIS : Existing law sets forth requirements for the
acquisition of goods and services by state agencies; sets forth
the various responsibilities of the Department of General
Services (DGS) and other state agencies in overseeing and
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implementing those state contracting procedures and policies;
and provides that a willful violation of its provisions for
which another punishment is not provided is a misdemeanor.
This bill:
1. Requires any personal services contract to incorporate
specific performance criteria and cost parameters, and the
contractor to submit quarterly reports to the state agency's
contracting official on the contractor's compliance with the
performance criteria and actual amounts billed to the state
agency.
2. Provides that the personal services contract may be canceled
if the contractor fails to comply with the performance
criteria and other requirements set out in the contract and
if annual charges exceed those established by the contract.
3. Provides that the personal services contract may be canceled
at any time if the contractor fails to comply with all
applicable local, state, and federal laws, regulations, and
statutes related to the contract.
Background
According to the Senate Governmental Organization Committee,
this bill sets additional requirements for service contracts
related to contract terms, reporting, and grounds for
cancellation.
For contract terms, this bill requires contracts to include
performance criteria and cost parameters. According to DGS,
such elements are generally already included in service
contracts as they specify the "scope of work" as well as the
"maximum dollar amount" of the agreement. The State Contracting
Manual (SCM), which is created by DGS and serves as a resource
for state agencies that contract, notes the importance of
clearly defining the expected work and maximum amounts.
Additionally, these categories are part of the Standard
Agreement form used when state agencies and contractors enter
into agreements. This bill codifies these requirements in the
Public Contract Code.
This bill requires service contractors to report quarterly on
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performance criteria and actual costs incurred. According to
DGS, some service contracts include reporting requirements while
others do not. Requiring such reporting is generally at the
discretion of the state agencies when they enter contracts.
While some of these quarterly reports may duplicate information
that is already included in contractors' invoices to state
agencies, the quarterly reports (especially for high-cost
contracts) could provide details that allows state agencies to
better oversee their contractors.
In addition to terms and reporting changes, this bill specifies
grounds for contract cancellation. Specifically, it states that
the contract can be cancelled if the contractor fails to comply
with performance criteria, exceeds annual costs established by
the contract, or fails to comply with all applicable local,
state, and federal laws, regulations, and statutes. According
to DGS, agreements between state agencies and contractors
specify expectations and the state can generally terminate the
contract for cause if the contractor is not performing or if
illegal acts occur. The SCM specifies how state contract
managers should address problems concerning contractor's
performance. This process involves notifying a contractor in
writing about performance concerns with the explanation that if
the deficiency is not corrected, the agency will terminate the
contract. Additionally, the state can dispute invoices and not
pay for those billed beyond the maximum agreed upon contract
amount.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/6/14)
AFSCME (source)
California Labor Federation, AFL-CIO
Courage Campaign
Professional Engineers in California Government
Working Partnerships USA
ARGUMENTS IN SUPPORT : According to this bill's sponsor,
AFSCME "this bill would hold outsourced public service providers
accountable for their actions and protect state agencies.
The Professional Engineers in California Government state that
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this bill protects the public's interests and tax dollars from
continuing to fund overpriced or substandard outsourced public
services.
ASSEMBLY FLOOR : 70-2, 4/21/14
AYES: Achadjian, Alejo, Ammiano, Atkins, Bloom, Bocanegra,
Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon,
Campos, Chau, Chesbro, Cooley, Dababneh, Daly, Dickinson,
Eggman, Fong, Fox, Frazier, Beth Gaines, Garcia, Gatto, Gomez,
Gonzalez, Gordon, Gorell, Gray, Grove, Hagman, Hall, Harkey,
Roger Hern�ndez, Holden, Jones, Jones-Sawyer, Levine, Linder,
Logue, Lowenthal, Maienschein, Medina, Mullin, Muratsuchi,
Nazarian, Nestande, Olsen, Pan, Perea, V. Manuel P�rez, Quirk,
Quirk-Silva, Rendon, Ridley-Thomas, Rodriguez, Salas, Skinner,
Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk,
Williams, Yamada, John A. P�rez
NOES: Ch�vez, Patterson
NO VOTE RECORDED: Allen, Bigelow, Conway, Dahle, Donnelly,
Mansoor, Melendez, Vacancy
MW:de 8/6/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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